Last month, we discussed some of the prevalent attributes of successful startups. One of the things that we mentioned in that list was the importance of startup leaders looking beyond Silicon Valley. In light of the recent market turmoil, having the courage to seek funding and set up shop elsewhere has become even more important. Here are a few ways that startups can benefit from exploring areas beyond the valley:
More Relaxed Environments
California is a pretty awesome state, and Silicon Valley has an undeniably electric atmosphere that clearly contributes to the continuous cultivation of creativity and innovation. There is no doubt that individuals and companies are surrounded by genius and inspired to attain similar status within their relevant community. However, because so many startups reside in or around the area, many of them are vying for the same resources, creating an extremely competitive business environment.
And, now that many of those resources are dwindling because of recent economic events, the business environment will become even more cutthroat. Thus, startups that can’t or don’t want to constantly fight for survival may want to consider becoming a pioneer elsewhere, especially cities with more relaxed environments, such as parts of the Midwest.
Increased Opportunities for Funding
In addition to avoiding the intensely competitive nature of Northern California, establishing a business elsewhere, particularly a city with a fairly young tech culture or a smaller venture capital network, increases a startup’s opportunities for receiving the funding it needs.
Depending on a startup’s goals and anticipated trajectory, it may be wise for a company to focus on becoming a big fish in a small pond, rather than floundering about as a small fish in a gigantic, crowded sea.
There are some cities in which certain types of companies aggregate. For example, because the Mayo Clinic is located in Rochester, Minnesota, the state has a healthy number of companies involved in medical and health care software, devices, and equipment.
Obviously, California has a reputation for being a tech haven, but for companies focused on a specific aspect of tech or some other niche market, there may be other cities better suited to serve as their host.
Less Expensive Resources
Silicon Valley isn’t exactly a cheap place to live, and California is outrageously expensive in many regards. Between the cost of residential and commercial real estate, taxes, and the average wages expected, particularly in the tech sector, most startups probably can’t afford to function, much less grow.
As a result, smaller businesses that start up in a state with lower taxes and a cheaper labor force available can make every dollar go a lot further. This may even help a company grow bigger in a shorter period of time.
Silicon Valley is clearly an amazing hub for entrepreneurs that fosters innovation, but it may not be the best place for every tech-related company to get its start. The U.S. is a huge country and opportunities are arising in plenty of other attractive locales. Startup leaders able and willing to venture beyond the valley will more than likely be glad they did.